Your first developer is statutorily your cheapest one: the in-house vs agency arithmetic in India

Short summary

In India, the in-house vs agency decision hinges on whether you can sustain ~900 hours/year of development work. Below that, an agency is cheaper; above it, in-house wins decisively. The hidden cost most founders miss: statutory obligations (EPF at 20 employees, ESI and gratuity at 10) create step-change cost cliffs based on company headcount, not individual salary — making your first developer statutorily your cheapest one.

• •Break-even is ~900 hours/year of dev work — below that, agency is cheaper in India
• •Statutory costs (EPF, ESI, gratuity) trigger at 10 and 20 employee thresholds, creating cost cliffs
• •Your first developer is statutorily cheapest because smaller companies owe none of the three obligations

Generated with AI, which can make mistakes.